What is meant by "marketable title"?

Marketable title refers to a property title that is free from significant defects, making it clear and investable for potential buyers. This means that the title is legally sound and can be transferred without any possibility of disputes that might arise from existing liens, claims, or other encumbrances. A marketable title assures buyers and lenders that they will not face unexpected challenges related to ownership or use of the property, thereby facilitating the sale process.

Titles with minor defects may still be deemed marketable under certain conditions, but the key aspect of marketable title is that it must not have significant defects that could jeopardize the rights of the titleholder or affect the transaction's integrity. Titles carrying legal disputes or extensive research needs would not be marketable as they imply uncertainty or potential legal or financial complications, which could discourage buyers. Thus, a title that is free from significant defects is essential for ensuring a smooth and secure transaction.